While second-placed Real closed the gap with an income of $296.9 million and AC Milan are in third spot Chelsea have climbed from 10th place to fourth in the space of just 12 months on $273 million.

Arsenal meanwhile are also on the up with the opening of their new 60000-capacity Emirates stadium in the summer of 2006 set to revolutionise their income levels thereafter.

The report concluded: 'With Chelsea's success and Arsenal's new Emirates stadium development we can foresee a scenario where English clubs fill the top three places in the 2006-07 money league.'

United continue to lead the way with the report concluding they 'are likely to remain the club to beat in future money leagues' with a significant lead over their nearest rivals.

But Chelsea could yet overtake them especially after concluding an eight-year kit deal worth $190 million with adidas while a lucrative sponsorship agreement is also just around the corner.

Chelsea's income for last season increased dramatically by 62% from $176.9 million in 2002-03 and that was even before it's significant progress on the pitch this season.

The report added: 'Having devoured two-thirds of Manchester United's revenue lead in one season Chelsea will not think that future overall leadership is beyond them.'

Progress has come at a huge price with the club having just reported a pre-tax loss of $167 million for last year - the biggest in English football history - after spending $332 million on new players and doubling the wage bill to $218.5 million.

However this latest league table is based on income with Chelsea's finances having been underpinned by the multi-million pound fortune of owner Roman Abramovich.

While Juventus have fallen out of the top three Spanish giants Real are another major obstacle for Chelsea and Arsenal to overcome if the club is to join United at the top.

However the Gunners' income is set to increase substantially when they move out of Highbury and they have concluded a lucrative sponsorship and stadium-naming rights deal with Emirates.

'We expect to see Arsenal move further up the money league in the coming years as they and Chelsea lead London's challenge to Manchester Madrid and Milan' the report added.

Indeed the sports business group at Deloitte who compiled the report believe British clubs lead the way in maximizing stadium revenues particularly in terms of corporate hospitality and non-matchday activities.

There were a total of eight English clubs in the worldwide top 20 with Liverpool in 10th Newcastle in 11th and Tottenham in 14th place.

Manchester City were debutants on the list in 16th place after the opening of their new stadium while Aston Villa returned after a five-year absence in 20th spot.

While there were five Italian clubs there were also two from Scotland - Celtic in 13th place and Rangers in 19th spot - the same number as from Spain and Germany as well as one from France.

Champions League fortunes nevertheless remain the key to clubs maximizing their incomes - and eight of the top nine clubs are due to face each other in the last 16 of the competition.